I expect all Power Units to be much closer to each other next season, but in no way I think that automatically puts Red Bull as favourites to win the championships.
Mercedes did enjoy a power unit advantage over the last three seasons, and Red Bull did show that even with less power, their chassis development can work wonders toward competitiveness. But there's still no evidence that RB's chassis is, in fact, better than Mercedes'.
To me the only thing that's almost certain is that Red Bull and Mercedes will be the ones fighting for the trophies at the end, but I wouldn't say one is favourite over the other, not to mention that on a rule change as big as this, a lot of unexpected things can happen, and as unlikely as it is, maybe at the end of the year a third team will get the titles.
As for the rivalry inside the team, I think Verstappen can do amazing things, as shown in Brazil and in many other opportunities over the year, but to me Ricciardo is still the better driver. He may not be as flamboyant and aggressive, but he's still really fast, and doesn't lack the skills to fight for position either. Also, Max has a tendency to, sometimes, counteract his acts of genius with some flops, as shown by the fact that he still didn't manage to finish a Monaco Grand Prix, which to me shows a lack of consistency, and calmness when necessary (as is the case of Monaco), things that Daniel overflows with.
So my bet: Constructors: Mercedes/Red Bull;
Better driver of the team: Ricciardo.